Schroder European REIT has declared its third interim dividend for the period ending 30 September 2021, equating to a pre-Covid-19 dividend level (1.85 eurocents per share).
In a recent business update via SENS, the company also reported an unaudited net asset value (NAV) as at 30 June 2021 of €198.6 million or 148.5 cents per share, a 0.8% increase compared to 31 March 2021 and a NAV total return of 1.8% over the quarter and 155% for the twelve months to 30 June 2021.
Its portfolio valuation has increased to €204.7 million over the quarter, reflecting a 0.9% increase, net of capital expenditure and it completed the acquisition of a €6.2 million logistics investment in Nantes, which reflects a net initial yield (NIY) of 5.5%, and an unexpired lease term of approximately seven years, furthering its portfolio exposure to the high growth logistics sector.
Schroder currently has c.€20 million of ‘firepower’ to deploy into a pipeline of acquisitions and a further c.€35 million to be released as the refurbishment of its Paris Boulogne-Billancourt is completed.
A further c. €35 million for investment, including debt, will be released as the refurbishment of the Paris, Boulogne-Billancourt is completed.
The company is in various stages of the acquisition process regarding new investments that will strengthen and diversify its exposure to growth cities, regions, and sectors.
Its portfolio has continued to demonstrate income resilience throughout the pandemic with rent collection remaining strong at approximately 94% for the first six months of 2021 and subsequent period, ahead of the 89% reported for the last six months of 2020.
Property portfolio valuations
As at 30 June 2021, the company’s property portfolio was independently valued at €204.7 million reflecting an increase of 0.9% or €1.8 million on the 31 March 2021 valuation of €202.9 million.
Excluding the 50% interest in Metromar Seville, which has now been reflected at nil in the balance sheet, the portfolio value increased by €2.3 million or 1.2%.
The valuation increase over the quarter was primarily driven by achieving full occupation at the Hamburg office investment alongside an improved yield re-rating and ERV growth (+ €1.9 million or 9.5%) and ERV growth at the Stuttgart office investment (+€1.0 million or 5.4%).
The company’s key asset management initiatives during the quarter included advancing the Paris Boulogne Billancourt office refurbishment with a further €1.5 million invested during the quarter and a further €19 million remaining to complete the works. Completion remains on track for 2022’s second quarter.
It has leased the final vacant office floor totalling 672m2 of its Hamburg office with the new lease agreed on a six-year term that represents 14% of the asset’s lettable area. The rent achieved is a c.10% premium to the business target. The building is now 100% let to seven office occupiers.
Schroder’s retail exposure in Berlin (DIY) and Frankfurt (grocer) represents 15% of the portfolio value and it continues to perform strongly, achieving c.100% rent collection during 2020 and during the first half of 2021 alongside valuation uplifts.
For the nine months ending June 2021, dividends declared totalled 5.27 eurocents per share with the dividend cover for the financial year will be c.70%.
In line with the company’s business plan, the dividend will be supplemented from the Paris Boulogne Billancourt sale profits, achieving 100% cover from income once all the sale proceeds are re-deployed.
Schroder intends to declare two further distributions with a target of approximately 4.75 cents per share each way of special dividend over the next nine months, allowing its shareholders to benefit from the profit associated with the successful Boulogne-Billancourt business plan.
The company will pay the third interim dividend on Monday the 8th of November 2021.